Why Every Tech Giant Is Now Building Their Own Chips—And What It Means for the Industry

Xiaomi just joined an exclusive club. The Chinese phone maker announced XRING 01, its homemade mobile processor built on TSMC’s 3nm process, making it only the fourth global smartphone brand (after Apple, Samsung, and Huawei) to design its own core chip. But this isn’t just about Xiaomi looking cool—it’s a signal of a much bigger shift reshaping Silicon Valley.

Companies across tech are ditching the old playbook: buy standardized chips from suppliers like Qualcomm or Intel, plug them into products, ship. Now they’re going custom.

The Silicon Shortcut

Why build your own chip when you can buy one off the shelf? Three reasons stand out:

First, performance on steroids. A chip designed specifically for your algorithms beats a generic one every time. Apple’s M-series chips crush Intel’s equivalent because every instruction is optimized for macOS. Same logic for AI—custom silicon can crush traditional GPUs when the workload is tailored to it. You get more bang for your power budget.

Second, the money math. Yes, designing chips costs billions upfront. But once volume ramps, cutting out middleman margins adds up. Over millions of units, that ROI flips hard.

Third, strategic lock-in. If you own the silicon, you own the roadmap. No supplier holding you hostage with price hikes or supply crunches. Huawei learned this the hard way—when export controls hit, its custom Kirin chips meant nothing without access to advanced manufacturing. But for most companies, in-house design = leverage.

Who’s Really Winning

The map looks like this:

Consumer brands are the visible players. Apple’s been doing this since the A-series iPhone chips in 2007; now Samsung (Exynos) and Xiaomi are following. Even Huawei designs Ascend chips, though geopolitical reality limits what it can actually manufacture.

But the real money? Cloud giants. Google’s been running custom TPUs since 2016. Amazon’s Trainium and Inferentia chips. Meta, Microsoft—they’re all burning cash on AI accelerators because data center workloads don’t play nice with off-the-shelf solutions. Amazon’s literally building data centers around its own silicon, including infrastructure dedicated to Anthropic.

These hyperscalers realized: we run the same models billions of times a day, so why pay NVIDIA margins when we can optimize every transistor for our specific stack?

The Squeeze on Traditional Players

This hurts, badly, in specific ways.

Qualcomm’s core business—selling Snapdragon processors to phone makers—just got hit. When Apple, Samsung, and Xiaomi design their own chips, Snapdragon units disappear. NVIDIA still dominates AI, but it’s sweating. Every custom TPU a hyperscaler deploys is an H100 they aren’t buying.

These companies aren’t dying tomorrow. But their playbook—charge premium prices for standardized silicon—is getting flanked.

The Unsung Heroes: TSMC and Arm

Here’s the plot twist: while custom silicon disrupts chip vendors, it supercharges foundries and IP providers.

TSMC is the enabler. Companies can’t afford billion-dollar fabs, so they license TSMC’s 3nm nodes, hand over their designs, and boom—physical chips. Xiaomi’s XRING 01? That’s TSMC. Apple’s M4? TSMC. Basically every hyperscaler custom chip? TSMC.

Same with Arm. Most custom chips—including XRING 01—license Arm’s Cortex CPU cores or Immortalis GPU designs. Why reinvent the wheel when Arm’s architecture already works? This lets companies focus on the unique parts of their silicon.

Net effect: TSMC and Arm get richer as custom silicon explodes.

The China Question: Export Controls Don’t Block Everything

People ask: how can Xiaomi design advanced chips when US export controls target China?

The nuance matters. Restrictions target AI and military-grade silicon, not consumer phones. That’s why Xiaomi can use TSMC’s 3nm for a mobile SoC—it’s not on the restricted list. Huawei got crushed because it tried building everything custom and hit the wall. But consumer-grade chips? Still accessible through Taiwan.

This shows the real strategy behind export controls: targeted throttling, not blanket bans.

What Happens Next

As AI spreads everywhere—cars, factories, smart cities—more companies will explore custom silicon. The barrier to entry is falling: better design tools, proven TSMC relationships, and Arm licensing make it feasible for more than just trillion-dollar giants.

The winners: foundries and IP providers that can scale with demand. The losers: chip vendors who haven’t pivoted beyond commodity selling.

The shift from standardized silicon to optimized silicon isn’t a blip. It’s the new normal.